stock market charts ( they are easier than you think) michael kahn, cmt february 2014
TRANSCRIPT
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Stock Market Charts(they are easier than you
think)
Michael Kahn, CMTFebruary 2014
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Who am I?
Chartered Market Technician (CMT) trained and certified in market
analysis
Columnist – Barron's OnlineNewsletter Editor – Quick Takes ProFormer charting software designer
…and beaten up enough by the markets
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What do I do?
Help investors assess risk and reward.
no crystal ballno tea leavesno chicken entrails
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Agenda
Just the basicsWhen the market is moving - trendWhen the market is resting - pattern
Other important stuff – volume, sentiment, time
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Possible Goals
Get the feel for the market (sentiment, momentum)
What does the market say? Bullish?Manic?
Does the chart agree with the fundamentals?
Or at least not disagree?Intangibles
The FedGurus“Risk on”
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Possible Goals
What part of the market is best? (relatives)
Sizebig or small
SectorsDefensive or aggressive?Traditional leaders or not?
Bonds? Gold?Maybe it is time to diversify asset classes
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Technical analysis is a windsock, not a crystal ball. - Carl Swenlin
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People
People tend to do similar things when faced with similar situations.
People’s behavior is the basis for chart patterns.
The chart is the chart is the chart.
(no analyst guesses and gov’t revisions)
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What is Fundamental Analysis?
A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors.
-- from the CFA Institute website(and Investopedia)
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What is Technical Analysis?
A method of evaluating securities by analyzing statistics generated by market activity.
-- from the Market Technicians Association website
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What do they have in common?
Neither one can handle conditions that cause the market to be restricted, manipulated and otherwise not free.
Fraud Mergers Quantitative Easing
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Save us Obi Ben Bernanke(sorry Janet)
Dated humor
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I will make you a chart you cannot refuse
The Godfather of Technical Analysis
How I cope
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Price Rules!
Price - The stuff you put in the bank
In price, there is knowledge.
Alan Shaw, CMT, Chief Technical Analyst.
Smith Barney, retiredRalph Acampora, CMT, Chief Technical Analyst, Prudential
Securities, retired
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Volume is next
Volume – How much money is moving
In volume, there is truth.
Dennis Jarrett, Jarrett Research
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Momentum
Momentum – How fast it got there
Which speed is profitable and most sustainable?
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Structure (Patterns)
Structure – Trends and Patterns
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Sentiment (Fear and Greed)
Sentiment
I feel good! Whatever She’s gonna eat us!
Tesla Oct 2013 Electronic Arts Jul 2012
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We got game!
Price Volume Momentum Structure Sentiment
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Looks like a cheaper place to buy
How many times have you thought, “My stock is on sale, let’s buy!”
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Looks like a cheaper place to buy
Same price, different trend……could the same be on tap for 2014?
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The trend said it all
It works in both directions.
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What does the market have to say?
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The trend said it all
It works in long-term time frames at major turning points, too.
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Does something look right here?
The Big Picture a few years ago.
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And today…
Log scales
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Leadership
Changing? Barron’s Online November
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Leadership
Changing again?
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Leadership
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Leadership
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It’s the end of the world as we know it. – R.E.M.
Sentiment
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Sentiment
Are you the last to be invited to the party?
social media stocks last year? biotech now?
Is your hair stylist giving you tips?
Are they ridiculing the bearish commentators?
Gold is going to $800!!!!!! Or for early 2009, were doom
and gloom forever?
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Quiz Time
Question - What does it mean when the neighborhood tavern has CNBC on the television and not ESPN?
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Quiz Time
Question - What does it mean when the neighborhood tavern has CNBC on the television and not ESPN?
Answer - the market is not at a bottom
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Quiz Time
Question - What does it mean when the banks are offering new interest only mortgages?
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Quiz Time
Question - What does it mean when the banks are offering new interest only mortgages?
Answer – the real estate market is not at a bottom……(sound familiar?)
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Quiz Time
Question - What does it mean when there are whole aisles in the supermarket dedicated to the Atkins diet?
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Quiz Time
Question - What does it mean when there are whole aisles in the supermarket dedicated to the Atkins diet?
Answer – time to buy bread and cereal stocks
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Question - What does it mean when everyone is talking about the Great Depression and Financial Armageddon?
Quiz Time
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Quiz Time
Question - What does it mean when everyone is talking about the Great Depression and Financial Armageddon?
Answer – It’s March 2009!
The AAII survey showed 70.27% bears on March 5. Unprecedented. And it was not the only one.
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Quiz Time
Question – What does it mean when, after a five-year bull market, mutual fund company advertisements show regular people saying “we’ve got to get back into the market?”
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Quiz Time
Question – What does it mean when, after a five-year bull market, mutual fund company advertisements show regular people saying “we’ve got to get back into the market?
Somebody is about to get burned again.
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Up is good, down is bad.
Nice long-term base
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What do you see?
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How about this?
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or this?
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There was no need to lose it all.
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There was no need to lose it all.
real trading!
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If you don’t see anything, it’s not there.
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If you don’t see anything, it’s not there.
Get it?
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Up is good, down is bad.
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Up is good, down is bad.
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Up is good, down is bad.
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The Real World Right Now
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The Real World Right Now
Double top, bear reversal
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Up is good,
Down is Bad
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The real reason we do this:
To make the buy, sell or hold decision.
Not to predict the future
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The Big Question
Does market analysis work anymore?
Yes! (mostly)
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The Real World Right Now
Profitable Trading. Written up on the breakout. Failed this week
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The Real World Right Now
Does Mikey like it?
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The Real World Right Now
Does Mikey like it?
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The Real World Right Now
Does Mikey like it?
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The Real World Right Now
Does Mikey like it?
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The Real World Right Now
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The Real World Right Now
Mmmm, dividends
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The Real World Right Now
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End with some laughs
An ode to Quantitative Easing
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Ben Lightyear.
QE to infinity and beyond!
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Have another shot of Bernanke juice.
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Ben Bernanke as a child
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